Competitive Tendering Costs Drop in Denver:
1999 Tender Results

In 1989, Denver's Regional Transportation District (RTD) was required by state Senate Bill #164 to competitively tender 20 percent of its bus service. On December 16, 1998, the third round of competitive tendering was completed, with the award of new five year contracts to TCT Services and Laidlaw Transit. TCT will provide more than 70 percent of the service. All of the service was previously provided by Laidlaw Transit.

  • RTD calculates that the competitively tendered service will save 29 percent over the contract term compared to the cost of delivering the service internally.(1)

  • When combined with other service tendered two years ago, under the Senat Bill #164 mandate, RTD's competitively tendered services will save 32 percent over the next two years.(2) (A longer analysis is not possible because the 1996 contract expires in three years).

In 1996, and RTD sponsored management report projected RTD savings due to competitive tendering at $88 million for the first ten years (through contracts expiring in 1999). The new savings will increase this amount to approximately $140 million through 2003.(3)

The 1999-2002 cost will be approximately 15 percent below the competitive operating cost per service hour in 1996-7, the year before the 1996 one-third service reprocurement.

The lower costs in the last two procurements are attributable to RTD initiatives to improve competition. In the previous procurement (1994), only incumbent operators submitted proposals. In 1996, two non-incumbents submitted, while in 1998 five non-incumbents submitted proposals. The RTD initiatives were consistent with recommendations in the 1995 management report.



Denver Regional Transportation District Competitive Tendering: Group X: 1999
Year Total Cost (Millions) Cost per Service Hour
Competitive RTD Savings Competitive RTD Savings
1999-2000 $13.529 $17.443 $3.914 $42.18 $54.38 -22.4%
2000-2001 $13.624 $18.654 $5.030 $42.39 $58.04 -27.0%
2001-2002 $14.114 $20.035 $5.921 $43.92 $62.34 -29.6%
2002-2003 $14.447 $21.215 $6.768 $44.95 $66.01 -31.9%
2003-2004 $14.891 $22.448 $7.557 $46.15 $69.57 -33.7%
Total $70.605 $99.795 $29.190 $43.92 $62.08 -29.2%


Denver Regional Transportation District Competitive Tendering: All Competitively Tendered Bus Service: 1999-2002
Year Total Cost Cost per Service Hour
Competitive RTD Savings Competitive RTD Savings
1999-2000 $20.824 $29.652 $8.828 $42.42 $60.40 -29.8%
2000-2001 $21.000 $31.290 $10.290 $42.73 $63.67 -32.9%
2001-2002 $21.723 $33.122 $11.399 $44.20 $67.39 -34.4%
Total $63.547 $94.064 $30.517 $43.12 $63.82 -32.4%


1. RTD analysis, 16 December 1998.

2. RTD analysis, 19 December 1996.

3. The contract awarded in 1996 reduced projected competitively tendered costs for one-third of the service by approximately 20 percent. This assumes that the reprocurement of the 1996 contract will result in rates similar to those bid in the 1998 contracts for the same year.

The Public Purpose: One of National Journal's Top 4 Transport Internet Sites
 NAVIGATION & PUBLICATION SERIES
NEW ITEMS
The Public Purpose
Demographic Briefs
Government Cost Review
Gov't Employment Fact Book
Highway & Motorway Fact Book
HOME
Intercity Transport Fact Book
Labor Market Reporter
Realities
School Transport Fact Book
Transport Fact Book
BOOK STORE
Urban Policy
Urban Transport Fact Book
Competitive Tendering Website
Intl Comp. & Ownership Conference
Alternatives to Light Rail in Seattle

 WEB SITE INFORMATION
Contact by E-Mail
Subscribe (Free)
Corrections Policy & Rights

The Public Purpose     WENDELL COX CONSULTANCY     Demographia
P. O. Box 841 - Belleville, IL 62269 USA
Telephone: +1.618.632.8507 - Facsimile: +1.810.821.8134
To facilitate the ideal of government as the servant of the people by identifying and implementing
strategies to achieve public purposes at a cost that is no higher than necessary.

(c) 2002 www.publicpurpose.com --- Wendell Cox Consultancy --- Permission granted to use with attribution.